Document Actions
PR-08-121 -- PSC Adopts Rules For Electric Utilities To Recover Environmental Costs
Contact: Kevin Kelly (573) 751-9300
FOR IMMEDIATE RELEASE -- FEBRUARY 29, 2008
JEFFERSON CITY— In a 4-1 vote, the Missouri Public Service Commission on Thursday adopted guidelines allowing electric utilities to apply for special environmental cost recovery mechanisms.
The rules establish an environmental cost recovery mechanism (ECRM) authorized by Senate Bill 179, which was passed by the General Assembly in 2005. The ECRM rule applies to the state’s four investor-owned electric utilities.
In the next decade, Missouri utilities are going to spend more than $1 billion to comply with new and existing environmental regulations. The ECRM, if approved by the commission in a general rate case, could allow companies to more timely recover costs of meeting those environmental requirements, reduce potential rate shock to customers and help minimize long-term costs. Most importantly, it will require utilities to identify the new equipment they’re paying for and the government policy causing the utility to incur the expense.
SB 179 gives the PSC the discretion to approve, modify or reject any ECRM after hearing and considering all relevant factors in a general rate case. The rules adopted by the commission provide the guidelines under which an electric utility company can seek an ECRM as part of a rate case where all of its costs of providing service to its customers would be considered.
SB 179 defines environmental costs as prudently incurred costs directly related to compliance with any federal, state or local government environmental law, regulation or rule.
“These rules give the commission a new tool to help electric utilities contain environmental compliance costs and encourage utilities to more quickly implement improvements to help the environment," PSC chairman Jeff Davis said. “Environmental compliance plans required under the new rule will give the PSC more information on environmental upgrades and efforts than we've ever had before."
An ECRM, if approved for a company, allows for periodic rate adjustments outside of a rate case to reflect increases or decreases in an electric utility’s environmental costs. A maximum of two rate adjustments could be made in a given year and the environmental adjustments would be capped annually at 2.5 percent of the company’s gross jurisdictional revenues as established in the company’s last general rate proceeding.
Any surcharges that result from environmental compliance costs would have to appear separately on customer bills under the requirements of the plan.
-30-
